UK manufacturing 'on the mend'

24-08-2006

The UK manufacturing sector is recovering, thanks in part to increased demand from overseas for capital goods, claims the Confederation of British Industry (CBI).

The CBI's monthly Industrial Trends survey found that the proportion of manufacturing firms reporting a rise in export orders compared to those that revealed a fall was at its highest for over ten years.

Although 34 per cent of companies reported a decrease in orders compared to 22 per cent experiencing an increase, their net difference of minus 12 still represents a positive development for the industry, claims Ian McCafferty, chief economic adviser at the CBI.

"The outlook for UK manufacturing is more encouraging than it has been for some time on the back of the stronger performance of eurozone economies and continued growth in the US," he said.

But he warned that despite the improving trend, overlying conditions in the UK market remain difficult, saying that "while the signs are encouraging, the pick-up in domestic demand of earlier in the year has not been sustained and there is still little sign of an increasing appetite for British made consumer goods".

"Until this happens the recovery will remain fragile," he added.

Commenting on the survey results, Howard Archer, chief UK and European economist at analyst Global Insight, predicted that industry firms could expect further growth over the remainder of the year.

He said the "industrial sector seems well set to make a further decent contribution to growth in the second quarter of 2006, following its robust growth in the first quarter, thereby helping growth to become more balanced."


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